Annually, Wooden Mackenzie’s grid edge analysts launch an replace on what’s happening within the markets they cowl. From the wide-ranging replace, which covers all the things from microgrids to house vitality administration to EV charging, Wooden Mackenzie chosen three key highlights to share with Greentech Media.
#1: SPACs are on the rise in cleantech
EV firms are embracing a brand new technique to increase capital.
Up to now in 2020, at the least 12 EV and EV-related firms have accomplished or introduced their intent to go public by way of a particular function acquisition firm (SPAC).
SPACs usually are not a brand new technique to increase capital. However they’ve actually gained traction in cleantech beginning in Q3 2020. That is particularly notable because the grid edge enterprise capital and strategic funding area has been pretty quiet general in 2020.
The way it works: Buyers put cash right into a SPAC, which then goes public. Funds raised from the IPO go in direction of buying an organization, which then turns into public itself by the acquisition course of. That provides the corporate a contemporary injection of capital whereas offering liquidity for traders.
An instance: ChargePoint introduced their merger with Switchback Vitality Acquisition Company only one month after elevating a $127 million enterprise spherical. In response to their investor presentation, Chargepoint was reserving income, however wanted the SPAC funds to increase its geographic presence and enter new markets to grow to be worthwhile in 2022.
Most firms within the EV market which are pursuing a SPAC are in the same boat. Their merchandise are hardware-based and so they have clients and revenues, however want extra capital to grow to be worthwhile and will have exhausted different funding choices.
The EV trade remains to be within the development stage, the place adoption is excessive sufficient to drive know-how innovation and spur new enterprise fashions, however not excessive sufficient for a hardware-centric firm to be worthwhile, making SPACs a great choice for some.
#2: Demand response is getting used to mitigate U.S. local weather change-related vitality deficits
Q3 was marked by a number of local weather disruptions. Two U.S. ISOs confronted extreme climate occasions that triggered their emergency responses to cut back and meet demand over the summer time.
Wooden Mackenzie observes that utilities are more and more counting on demand response to dispatch capability throughout these local weather change-related vitality deficits.
One instance got here in July, when higher-than-average temperatures resulted in excessive system demand within the territory of Midcontinent Impartial System Operator (MISO), which has been reforming its demand response regime. MISO labored with transmission house owners to yield four,986 megawatts of demand response to satisfy the capability shortfall (though the DR was in the end not wanted).
The next month, MISO ready for hurricanes Marco and Laura by assessing implications for technology, transmission and imports pre-positioning property unable to resist hurricane impacts. Depletion of working reserves and transmission congestion resulted in 500 MW of load shed, the final resort in MISO’s capability emergency responses after emergency technology, load administration, using working reserves and emergency reserve purchases.
Comparable last-resort steps had been taken in California in August, when excessive warmth led to state grid operator CAISO instituting rolling blackouts. Because of this, slightly below 1,500 MW of load was shed between August 14 and 15.
In response, 4 DR aggregators collaborating within the state’s Demand Response Public sale Mechanism (DRAM) dispatched 410 MW throughout this deficit. In complete, DR was referred to as an unprecedented 70 occasions in California between August 14–20.
Traditionally most demand response has been achieved with business and industrial clients property and residential load management gadgets. However the rising variety of good thermostats, good water heaters, EV chargers and behind-the-meter batteries are altering the character of demand response in California, and driving state policymakers to think about new strategies to enlist them in occasions of grid deficits.
#three: Hints of DER readability because of FERC Order 2222
And naturally, a spotlight from Q3 with severe impression throughout grid edge sectors is the passage of FERC Order 2222, which Wooden Mackenzie analysts count on to carry readability to DER market participation.
Wooden Mackenzie’s Q3 Grid Edge Briefing notes that by 2025, DER capability added since 2016 will probably be corresponding to renewables on the majority technology facet – a measure of simply how impactful Order 2222 may very well be for the grid.
Handed in September, Order 2222 is designed to allow distributed vitality assets (DERs) “to take part alongside conventional assets within the regional organized wholesale markets by aggregation.”
Going ahead, to be able to faucet into potential worth streams from DER capability on the wholesale and retail ranges, distributors with distributed technology, software program options to optimize DERs, and utilities will discover worth in persevering with and increasing on long-standing partnerships.
In creating the situations for DERs to faucet a number of income streams in wholesale markets and due to this fact bettering their economics, Order 2222 offers additional assist for non-wires alternate options. Permitting orchestration and aggregation of assets each behind and in entrance of the meter might pave the way in which for standardization of non-wires alternate options deployments whereas growing deployment charges.